MR. GALSTON [moderator]: ….And with that, on with the show beginning with David Rivkin.

MR. RIVKIN: Bill, thank you very much. It’s a pleasure to the individual mandate violates the most fundamental — oh, sorry. Forgive me.

Thank you, Bill. Pleasure to be here.

And the individual mandate violates the most fundamental constitutional principles. It violates centuries of established case law, and it is fundamentally different from any law that Congress has ever enacted to regulate commerce.

Indeed, I would submit if this mandate is constitutional when the framers drafting both the original constitution of the Bill of Rights and of Congress’ legislative activities from the founding to today are at best incoherent, at worst are superfluous.

Now, the bottom line of it, folks, we’re defending the mandate — is that doing nothing is an economic activity, that Congress can reach for the commerce clause proper or is augmented by the necessary and proper clause, and I would argue that this claim has at least five major constitutional consequences, all of which violate the fundamental principles in case law.

First, the most obvious one, it eviscerates the dual sovereignty system, which is a key feature of our constitutional architecture, which, by the way, is not just done for pedantic or archaic purposes but was meant to protect individual liberty by diffusing power both vertically and horizontally in the context of a federal government. In that system if it were to be viable, for it to be meaningful, the federal government has to exercise, ladies and gentlemen, limited and enumerated powers while their states are exercising “residual sovereignty,” in the words of James Madison, which is often described as police power.

Now, what does it mean to exercise police power? That is the same thing as regulating people because of who we are, not because of what they do. In fact, it is the key attribute of the police power.Another key attribute of police power is that, unlike regulation of individuals based upon the activities, it cannot be avoided.

Nothing captures this thing better than one is dealing with a federal statute of irregulating wheat or cannabis. All that one has to do to avoid (inaudible) when the regulatory ambit of that statute is not to touch, possess, handle, or do anything else that people tend to do with those commodities. By contrast, when the state of Massachusetts wants to ensure that you will be vaccinated and you’re in the borders of Massachusetts you cannot avoid this mandate.

Now, to justify claiming — the claim that the federal government can regulate an activity — the federal government, in essence, argues that an activity, in this particular instance a failure to acquire a particular good in service happens to be medical insurance, but broadly speaking — good in service is within the scope of the commerce clause because it has an economic footprint.

The most elegant version of this argument made by Judge Kessler, which is one of our three judges that reads this issue, better written opinion, frankly speaking, than (inaudible), too, but still fundamentally flawed, his argument essentially proceeds as follows:

A failure to purchase insurance, a decision; and since both purchasing and non-purchasing decisions in the aggregate has substantial economic footprint, can be used under the commerce clause. I would submit the front end makes rather heroic assumptions about how people reach certain situations in life a lot of times that doesn’t involve structured decision.

But more fundamentally, there’s no meaningful limiting principle here, because every situation, every failure to purchase, every failure to engage in, let’s say, productive activity — sleeping or taking a vacation — in the aggregate, in the modern economy has substantial economic impact. No meaningful limiting principle can be found and, therefore, under that logic all inactivities can be swept under the commerce clause. The federal government is exercising general police powers, given the supremacy clause, the dual sovereignty system is vitiated.

Now, of course, the federal government is a bit nervous about making this argument bereft of any meaningful limiting principle, and they’re trying to come up with a backup argument which basically says health care is unique. Ladies and gentlemen, it ain’t true. It’s not unique by a long shot — all the efforts that have been made to explain how unique it is dealing with such things as inevitability of consumption. Well, there’s inevitability of consumption across a significantly large strata of population in every market, including market for luxuries. If there was no such inevitability of consumption, those markets would not exist.

Then they talk about cost shifting. Cost shifting is ubiquitous in modern economy. In every market where you do not pay on the barrel — cash on the barrel — there is credit being extended; there’s a possibility of default. Defaults occur on the scale that arrivals that, exceeds that in the health care market and the mortgage market, and the credit card market, the market of personal bankruptcies, et cetera. So, there’s really no limiting principle. The health care is not unique.

There are a lot of interesting arguments to be made about the necessary and proper clause here, which hopefully we’ll talk about later, but let me just say for purposes of this discussion, the fundamental reason that the necessary and proper clause does not work for the federal government is this. The dual sovereignty system and the need for meaningful limiting factors are not unique to the commerce clause. The federal government cannot exercise general police power either by utilizing the commerce clause alone or the commerce clause as augmented by the necessary and proper clause or, for that matter, all of the enumerated powers in Article I. And if it were to do so, it would be improper. There are a lot of other reasons why the necessary and proper clause argument does not work, but that is probably the most palpable.

The other problem we have is the federal government’s reading of a commerce clause and in answering proper clause. In effect, it eviscerates whole sections of a constitution, which we know both as a matter of logic and Supreme Court teaching going back to Marbury v. Madison is not the way to interpret the Constitution. If you think about it for a second, if you interpret the commerce laws and (inaudible), there are only two clauses in Article I — the way federal government does — all of the other powers are completely redundant, are completely superfluous because the federal government can accomplish anything it wants using those two clauses alone. And unless you make an assumption that framers were not intelligent enough to figure it out, this is a fundamental problem.

Next fundamental problem is it, in effect, takes the Bill of Rights — and always remember how it came about. The framers felt just about all the structural protections in the original Constitution, it made sense to come up with a secondary line of defense to deal with the possibility that the government exercising those powers it could exercise would nevertheless be abusive. Guess what. There’s absolutely nothing in the Bill of Rights that deal with the problems posed by the capacious exercise of a commerce clause of and by itself which is augmented by a necessary and proper clause. It’s completely irrelevant. And that, again, requires you to assume that the framers did not know that they were drafting the Bill of Rights.

The next problem is if the individual mandate works, that puts into question the sanity of all previous congresses, because Congress is always regulated under the commerce clause, indirectly and often partially, using the necessary and proper clause.

A perfect example: government simply mandating that people go out and buy flood insurance, Congress required flood insurance only in the case of individuals who are securing mortgage from a family chartered bank. And the same if you look at all the other commerce clause statutes, including the one in (inaudible) and Wickert. Would have been a much more direct way of doing it, just mandate that people buy this or buy that. So, obviously Congresses up to now never could figure it out.

And the final problem is they would fundamentally rework — it’s more of a politically philosophy argument, but it does have constitutional implications — would fundamentally rework the relationship between the citizens and the government. The government can actually compel individuals — require individuals — in a very few narrow areas that have to do with the core duties of citizenship — voting, Census, serving in the militia or the military — and all of them relate to, again, the core definition of civic responsibility and participation in government-run activities.

Requiring individuals, in effect, to purchase goods and services from other set of private set of private individuals would fundamentally change that definition of citizenship which underlies our Constitution.

Thank you.

Part 2: Rebuttal

MR. GALSTON: Thanks so much. We’ve now reached the rebuttal stage, starting with David Rivkin.

MR. RIVKIN: Thank you, Bill.

Look, [the individual mandate is] not a tax. Every court that looks at. It’s not a tax. It doesn’t mean it couldn’t have been a tax. That’s not what Congress did. And the reason they didn’t do that is a very simple reason. They didn’t want to pay the political price for it, okay? It would have been very easy to write it up as a tax. They could have said you pay extra tax and then if you purchase this particular type of qualifying insurance package, you get a deduction. But they didn’t want to pay the political price. So, that’s easy.

The militia stuff. I said very clearly I’m not making a broad libertarian argument, ladies and gentlemen. The government cannot compel individuals to do anything. It can pursuant to narrow, specific, enumerated powers that go to the core of one’s citizenship once membership in embodied polity. One of the reasons it can be done without jeopardizing the dual sovereignty system because these powers are narrow, and even augmented by necessary and proper clause did not amount or specie of general police power. That ain’t the case with the commerce clause.

But the notion that there is something unique about health care is utterly specious and it’s frustrating to me, because people keep throwing $43 billion around. I argued in the first round of our argument that there’s over $80 billion worth of cost shifting in the credit card market, because people don’t pay their credit card bills. Guess what happens with it, ladies and gentlemen. The free-riders who are getting discharged for bankruptcy and other means saddle you with that, those who pay their credit card bills. An economy almost tanked because of a subprime mortgage with hundreds of billions of dollars worth of cost shifting. Anybody is capable in modern society of imposing costs on his fellow citizens — when you lose a job, be it an accident, if you’re not an insured. Unless you carry with you a bubble, an insurance bubble, that mitigates all the costs you’re going to impose on your fellow citizens, you are going to be capable of imposing such costs. So, under the government’s logic, all of us are supposed to buy comprehensive insurance.

Remember the AFLAC commercial? There’s nothing to do — you could be broke. Even if your medical expenses are paid for, what about your food, what about your gas? You don’t want to be asked to pay that. There ain’t anything unique about medical insurance market, and that’s the truth.

Now, the thing that stuns me, frankly, that anybody who cares about civil liberty is going two claims, both of which if we — by the way, my favorite argument made during the Bush administration — most of you would be appalled.

Claim No. 1. You know what? If it’s stupid, Congress is not going to do it. It may not be just dishable. There may not be a way to do that in the context of a case. Five men or men and women sitting wearing robes in the Supreme Court. But who cares? Congress is not going to do it. Can you imagine an argument used in the context of one less wiretapping when in interrogations at Guantanamo? Half of you — probably two-thirds of you would be appalled by that. That’s what we hear. Don’t worry about it. It’s not going to happen, because Congress is not going to do it.

The second argument that is utterly specious — and I’m sorry to put it in such blunt terms, Walter, (inaudible) — what individual liberty doesn’t violate the Bill of Rights? The Bill of Rights, ladies and gentleman, is the secondary line of defense in our constitutional system. The first line of defense is structural limitations on ability of governmental units to deal with us, okay? Congress holds legislative power, not executive, not judicial. Article III, Courts hold judicial power. Nobody’s asking whether or not an Article III court can rule legislative power provided it doesn’t violate some interest protected by the Bill of Rights. That is an absurd level of inquiry.

The bottom line is this: Congress could have done — oh, and my third favorite is but Congress could do it in other ways. The Constitution, ladies and gentlemen, is fundamentally about how you do things. Congress could have done it and been willing to pay a political price. The fact that they chose to do it in this way is what dooms this particular mandate.

And the final point, which I think my colleague Ilya made twice, it’s not called necessary or really necessary clause — it’s called necessary-and-proper clause. And I notice my friend, Richard, did not quote the full cite from McCullough. The language was, “It has to be proper,” not “repugnant,” “to the Constitutional scheme.” Nothing could be more repugnant than using the necessary-and-proper clause in conjunction with the commerce clause. That eviscerates dual sovereignty. Nothing can be more repugnant. So, if we have time I can explain to you why it’s really necessary, which is a much more elaborate and technical argument. But it certainly ain’t proper.

And the last thing that makes me hot under the collar, there’s no case law that supports the proposition. None. If we have time to go and talk about every single commerce clause case — which I’d be happy top — and every single necessary-and-proper case, it does not support that position. The notion that we’re trying to overturn, establish constitutional principles and go back to the pre-Lachlan or, you know, Lachlan era jurisprudence is just specious. It ain’t so. This is utterly unconstitutional, probably the most unconstitutional provision in our history, and I’m saying it without hyperbole.